Is My Budget Too Tight? My Plan for Handling a 50% Income Reduction

I walked away from the sale of my businesses last December with a little money in the bank. Enough to be excited about the transaction; not enough for you to construe this as bragging. It was a fun month – then it was time to look for a job.

By March I’d landed with YNAB, and I’ve loved it. I’m really grateful to be here.

The only sticky point has been the 50% income reduction. Don’t get me wrong – I’m compensated well. It just happens my self-employed income was higher.

envelope with money

Rather than deal strictly with the truth, I’ve lived off a combination of the proceeds of the business sale and my YNAB income, with the idea that I’d eventually supplement the YNAB income with freelancing. I’ve started to line up freelance writing clients, but it occurs to me that the smart move would be to live strictly on my YNAB income and use freelancing to pay off the last of my debts and get serious about saving.

So, I made a new budget. It requires a lifestyle change, for sure, but we’re not talking about Greek-level austerity here. I thought I’d share it with the YNAB community and get everybody’s take.

My Budget

Monthly Bills
Mortgage$1711$438 of this is the 2nd mortgage, aka My Deep Shame.
Utilities$125Water, electric, trash.
Betterment$100Needs to be 15x more. After paying off debts, freelancing income could go here.
Internet$72This is the current amount, with Comcast. Likely switching to Digis at a savings of ~$20/mo.
Natural Gas$57 
Cell Phones$155Two iPhones with Sprint. Considering a switch to Republic Wireless at a savings of ~$100/mo, but some comments on their community forum temporarily scared me off.
Netflix/Amazon Prime$15.20 
Giving$710Feel a little odd publishing this, but hey – it’s in the budget.
Everyday Expenses
Groceries$450Represents a 25% decrease off our current spending. Will require focus, creativity, and potatoes.
Household Misc$200Having recently broken ‘misc’ into six new categories, not sure whether this number is high or low.
Fuel$100The SUV will need to spend more time in the garage, with my wife using the compact as the family “get-around” car. Luckily, my wife is awesome and said she didn’t mind a bit.
Dental$75Hopefully this is high – better safe than sorry. Planning to talk to the dentist about possible trade of services (copywriting in exchange for cleanings).
Medical$50To cover co-pays and prescriptions, etc.
Restaurants$50Will require a little more planning. We’ve already been trending in this direction, so it shouldn’t be too bad.
Clothing$40Recently broke this out of ‘misc.’ Time will tell if it’s a workable number.
Kids’ Activities$40Also recently broken out of ‘misc’ to cover things like art classes, swim lessons, etc. Feels a little high to me. We’ll see.
Her Fun Money$20 
His Fun Money$20 
Unpredictables$30To offset overspending elsewhere.
Rainy Day Expenses
Health Insurance$650Recently moved kids to high deductible plans. Insurance co. recommended re-evaluating in October in light of Affordable Care Act (when our infertility will not prevent us from having the entire family on one plan).
Life Insurance$155Hate this expense, but wouldn’t be without it.
Car Insurance$60 
Car Repairs$50 
Home Exterior$25 
Home Interior$25 
Christmas$25This will allow for very few gifts, which I find appealing for non-financial reasons.
Birthdays & Other Gifts$10 
Residential Lot$160Hoping to sell this debt within a few months. Utah’s new housing bubble may help.
Student Loan$97.02 
Debt Snowball?All freelancing profits will go into the snowball.

Early Reactions to the Budget

Kate (my wife): I don’t care about driving the Civic, but I don’t know how that grocery budget is going to work.

Peter (my younger brother): This budget is tight.

(Initially I thought he meant “tight” as in “cool.” Then I thought maybe nobody says that anymore. Then I remembered I’m old, and not cool.)

Jesse: This is a good budget.

(Said with no small amount of nostalgia, maybe even a hint of envy. Don’t worry – I think he recovered quickly.)

What do you think? How does this stack up to your spending?